How are we doing and should we extend or move?

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niceoneted

Registered User
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2,084
Age: 42
Spouse’s/Partner's age: 43

Annual gross income from employment or profession: 60000
Annual gross income of spouse:35000

Monthly take-home pay €5,500 Plus €280 CB

Type of employment: e.g. Civil Servant, self-employed: me Public OH Private permanent.

In general are you:
(a) spending more than you earn, or
(b) saving? Saving €1,200 a month

Rough estimate of value of home €240,000
Amount outstanding on your mortgage: €65,000
What interest rate are you paying? 0.5% (Tracker)

Mortgage ends April 2027

Other borrowings – car loans/personal loans etc : None

Do you pay off your full credit card balance each month? YES
If not, what is the balance on your credit card?

Savings and investments: Approx €100K spread across state savings.

Do you have a pension scheme? Yes both Unsure of exact details.

Do you own any investment or other property? Yes outstanding mortgage and remaining mortgage same, paying for itself currently

Ages of children: 2 & 3

Life insurance: Just whats attached to the mortgage.

Other expenses other than the norm of household are childcare €1,000 a month and €500 for elderly family care which will be in place I would imagine for a few more years 3/5.
I go though a household budget each year and shop around for electric/Gas/Insurances/Phones etc. We are light on clothes shopping. Food shopping could be tightened up and we are working on that. we are not big drinkers and don't smoke.


What specific question do you have or what issues are of concern to you?

we are considering either putting on an extension (€50k) or moving nearer Dublin and to a 4 bed (€400K if lucky /€450K if not) we are not sure what to do. will we be leaving ourselves too tight if we move. We like to take two one week hols a year (but do middle of the road cost wise) and a weekend or two away too. We use cash to change the cars - we currently have one decent family car and a much older run around and no intentions of changing either for next 5/6 yrs. we ideally would like to hold onto the house we are currently living in and are open to selling the one that would break even.
Any thoughts welcome especially from anyone who has taken the leap.
 
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niceoneted said:
Do you own any investment or other property? Yes outstanding mortgage and remaining mortgage same, paying for itself currently
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Can you give more details about this?
Value of house
amount of mortgage
Lender
Interest rate - i.e. tracker or not?
Rental profit before interest or tax i.e. rent less average annual expenses

Brendan
 
Sorry Brendan, OH looks after this, value approx. €150k with outstanding mortgage of €155k, tracker of 1.5% above ECB if I recall correctly. As far as I'm aware it covers itself. OH looks after it with accountant. Tenancy is registered and it is fully tax compliant.
 
OK, if you have a tracker on this property, it's very profitable. The rent is probably around €9k a year and the interest charged around €2,000 a year. So you should hold onto this, if judging it in isolation.

Don't worry about losing the tracker on your home. You are saving 2.5% interest on €65k or €1,600 a year. So it should not be a significant factor in the calculations.

You have €390k worth of property already and you are planning to buy another property for €450k. That would leave you with €850k worth of property which is too exposed to the sector.

So it's clear that you should sell your current home.

This will leave you with around €170k equity and €100k cash. So if you want to buy a home for €450k, you will need a mortgage of around €180k. This is less than 50% LTV and about twice your income. So very manageable.
 
niceoneted said:
we ideally would like to hold onto the house we are currently living in
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This is not a good idea.

You would need to borrow €350k to buy your house in Dublin. That is too much at your age. You would also have too much exposure to property.

You probably have a good capital gain on it which is tax-free at the moment. But if you keep it as an investment some of this could become subject to CGT.

You are well off. You should buy the house you want in the area you want. And you should do so with a comfortable mortgage.

There is no point in pushing yourself into a tight position. While you are both well and both working, you can afford it. But what if your spouse or you wants to take a career break? There would be no way you could afford it.

You could probably comfortably spend €500k on a house in Dublin. So sell your current home and buy the house you want.

Brendan
 
I think rental on it is €15,000 on the first property. Its an apartment in not a great area.
House interest is only about €400 a year as its 0.5% tracker. We were hoping more so to hold on to this as could be a house kids could have when older. Its more likely to hold its value and or we may move back to it after retiring. Sorry its amazing all this things come flooding into your head when you think you've included them all in original post.
Potential rental income would be about €1,200 a month on the house.
 
The mechanics

If you are with a mainstream lender, then they will let you move your tracker and you will pay a bit more interest. Check this out, but shop around anyway. You may be better off with another lender paying a lower overall rate on the entire mortgage.

You could probably get a mortgage to allow you to buy your new home without selling your current home and then you could sell your current home after you move in. It's probably the easiest, if the lender will allow this. You will have to sell your current home first, if you want to keep the tracker, but as I have already said, this should not be a deciding factor.

Would it be possible to do the following:
1) Sell your current home
2) Move temporarily into your investment property
3) Buy your new home
4) Start renting out your investment property again.

Brendan
 
niceoneted said:
We were hoping more so to hold on to this as could be a house kids could have when older. Its more likely to hold its value and or we may move back to it after retiring.
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Is this a unique house which you built yourself?

Why would the kids want a unique house? Surely they would prefer to be nearer Dublin?

I think that planning for a comfortable future for the next twenty years is more important than what might happen after the twenty years.

Brendan
 
niceoneted said:
I think rental on it is €15,000 on the first property. Its an apartment in not a great area.
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€15k rent and €2k interest, and you are thinking of selling it?

Do you understand that most of your monthly repayments are capital and in time, you will have €15k rent and no mortgage?

Brendan
 
There is a small possibility that the lender on your investment property might allow you to sell it and move the tracker to your new home.

If that is on, then it's well worth considering.

Brendan
 
All of this sounds great in theory - but in effect you are going to be borrowing 175k more @ 3% odd to hold onto it. This adds roughly 970 euro a month onto your mortgage repayments over a 20 year period (2500 per month v 1525 per month) - and its likely the interest rate will be higher if you keep it due to LTV. Are you comfortable with a 2500 mortgage per month on your new home?

niceoneted said:
Do you have a pension scheme? Yes both Unsure of exact details.
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You are 42/43 - you need to understand your pension details a lot more. I would be more inclined to focus on growing pension funds than adding another property to a portfolio, especially if it is rural based.
Now if you have a definite plan of retiring back to that house in the future and the Dublin move is only a short term 20 year plan, then that is another matter. Have you lived in Dublin before? How easy will it be to uproot at the time. Are you from the area your current house is in and how strong are your ties to it? Will these ties last a 20 year break?

niceoneted said:
Life insurance: Just whats attached to the mortgage.
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I would see this as a major issue for your family with two young children. I think this is the first thing that needs to be addressed, as a matter of urgency

niceoneted said:
Other expenses other than the norm of household are childcare €1,000 a month
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Remember Dublin childcare costs are higher than the country !!


So in summary, I would suggest you try move your existing tracker to the new house (assuming it makes sense to do so), sell your current house, focus on growing your pension and sorting out greater life cover.

The other option you have is to move closer to Dublin renting for a year to see what you think of the move and then decide what you want to do. Dublin with young kids is very different to the county with young kids - and as they get older the difference grows even more. You just need to be careful about moving to Dublin if you have not lived here with kids before - its a very different life than when you were young, free and single !

Good luck with the decisions.
 

That is an excellent suggestion.
 
As pointed out by gnf_ireland, the lack of life assurance is alarming. You could sort this out cheaply today with a term policy. There is value in reducing a commute if you can and even better if it meant you could reduce to one car.
niceoneted said:
Food shopping could be tightened up and we are working on that.
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I rebalanced my Dunnes/Aldi shop this year, out of necessity, and have cut the cost by 25%.
 
michaelm said:
I rebalanced my Dunnes/Aldi shop this year, and have cut the cost by 25%.
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i would imagine the vast majority of people could cut 10% from the food bill by removing waste alone, having a list before going shopping and having a meal plan

michaelm said:
You could sort this out cheaply today with a term policy.
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I am not sure I would call it cheap at their age - it depends on what kind of cover they want and whether its to 60, 65 or 70. We are the same age (marginally younger) and changing our cover at the moment and its definitely dearer than the cover I got at 36

niceoneted said:
Ages of children: 2 & 3
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I should add to the OP that my kids are nearly 6 and 4, so just a few years ahead of you. I know all about the challenges of city life with young kids.
BTW one thing that comes into the equation more with kids and Dublin is public v private schools ! Its not as big an issue down the country..
 
gnf_Ireland you have me worried about life assurance now. we were talking through all the options at the weekend and that was on the top of the list to sort.
Anyone any thoughts on staying and extending house. we are 30 miles from Dublin but were looking to half that. We would not be in Dublin itself. We have more friends and supports where we would intend moving to - North Kildare. Neither of us have any ties to where we currently live.
 
I did a back-of-the-envelope calculation as to what lump-sum myself or my wife would need if one was to die before the kids are reared and then took out a dual, non-indexed, convertible term life policy which would see us beyond the youngest being 20. LA Brokers (no connection) are good for instant quotes.
 
niceoneted said:
you have me worried about life assurance now. we were talking through all the options at the weekend and that was on the top of the list to sort.
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If you want to PM me I will share the quotes I have for life assurance with you to give you an idea of what you are talking about. I can PM my broker details if you wish also

There are some brokers on these forums so they may contact you directly.
 
michaelm said:
I did a back-of-the-envelope calculation as to what lump-sum myself or my wife would need if one was to die before the kids are reared and then took out a dual, non-indexed, convertible term life policy which would see us beyond the youngest being 20
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I did similar taking into account other life assurances in place both via work and previous policies. I done it to the youngest age of 23 (so they would be out of university after the scenic route) and I would be 65 !!
 
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